HOUSE AMENDMENT
Bill No. HB 291
Amendment No. 1 (for drafter's use only)
CHAMBER ACTION
Senate House
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5 ORIGINAL STAMP BELOW
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11 The Committee on Insurance offered the following:
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13 Amendment (with title amendment)
14 Remove from the bill: Everything after the enacting clause
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16 and insert in lieu thereof:
17 Section 1. Subsections (1) and (4) of section
18 624.4072, Florida Statutes, are amended to read:
19 624.4072 Minority-owned property and casualty
20 insurers; limited exemption for taxation and assessments.--
21 (1) A minority business that is at least 51 percent
22 owned by minority persons, as defined in s. 288.703(3),
23 initially issued a certificate of authority in this state as
24 an authorized insurer after May 1, 1998, to write property and
25 casualty insurance shall be exempt, for a period not to exceed
26 10 5 years from the date of receiving its certificate of
27 authority, from the following taxes and assessments:
28 (a) Taxes imposed under ss. 175.101, 185.08, and
29 624.509;
30 (b) Assessments by the Florida Residential Property
31 and Casualty Joint Underwriting Association or by the Florida
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HOUSE AMENDMENT
Bill No. HB 291
Amendment No. 1 (for drafter's use only)
1 Windstorm Underwriting Association, as provided under s.
2 627.351, except for emergency assessments collected from
3 policyholders pursuant to s. 627.351(2)(b)2.d.(III) and
4 (6)(b)3.d. Any such insurer shall be a member insurer of the
5 Florida Windstorm Underwriting Association and the Florida
6 Residential Property and Casualty Joint Underwriting
7 Association. The premiums of such insurer shall be included in
8 determining, for the Florida Windstorm Underwriting
9 Association, the aggregate statewide direct written premium
10 for property insurance and in determining, for the Florida
11 Residential Property and Casualty Joint Underwriting
12 Association, the aggregate statewide direct written premium
13 for the subject lines of business for all member insurers.
14 (4) This section is repealed effective December 31,
15 2010 July 1, 2003, and the tax and assessment exemptions
16 authorized by this section shall terminate on such date.
17 Section 2. Subsection (11) is added to section
18 627.0629, Florida Statutes, to read:
19 627.0629 Residential property insurance; rate
20 filings.--
21 (11) All rate filings under this section relating to
22 coverage for windstorm losses shall reflect historical
23 insurance data. When using a computer model in making a rate
24 filing under this section, the insurer may use only a computer
25 model which is based upon standards and guidelines developed
26 or established by the Florida Commission on Hurricane Loss
27 Projection Methodology under s. 627.0628. Consideration of
28 historical insurance data and the use of computer models shall
29 be consistent with applicable actuarial standards of practice.
30 Section 3. Paragraph (b) of subsection (2) of section
31 627.351, Florida Statutes, is amended to read:
2
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HOUSE AMENDMENT
Bill No. HB 291
Amendment No. 1 (for drafter's use only)
1 627.351 Insurance risk apportionment plans.--
2 (2) WINDSTORM INSURANCE RISK APPORTIONMENT.--
3 (b) The department shall require all insurers holding
4 a certificate of authority to transact property insurance on a
5 direct basis in this state, other than joint underwriting
6 associations and other entities formed pursuant to this
7 section, to provide windstorm coverage to applicants from
8 areas determined to be eligible pursuant to paragraph (c) who
9 in good faith are entitled to, but are unable to procure, such
10 coverage through ordinary means; or it shall adopt a
11 reasonable plan or plans for the equitable apportionment or
12 sharing among such insurers of windstorm coverage, which may
13 include formation of an association for this purpose. As used
14 in this subsection, the term "property insurance" means
15 insurance on real or personal property, as defined in s.
16 624.604, including insurance for fire, industrial fire, allied
17 lines, farmowners multiperil, homeowners' multiperil,
18 commercial multiperil, and mobile homes, and including
19 liability coverages on all such insurance, but excluding
20 inland marine as defined in s. 624.607(3) and excluding
21 vehicle insurance as defined in s. 624.605(1)(a) other than
22 insurance on mobile homes used as permanent dwellings. The
23 department shall adopt rules that provide a formula for the
24 recovery and repayment of any deferred assessments.
25 1. For the purpose of this section, properties
26 eligible for such windstorm coverage are defined as dwellings,
27 buildings, and other structures, including mobile homes which
28 are used as dwellings and which are tied down in compliance
29 with mobile home tie-down requirements prescribed by the
30 Department of Highway Safety and Motor Vehicles pursuant to s.
31 320.8325, and the contents of all such properties. An
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HOUSE AMENDMENT
Bill No. HB 291
Amendment No. 1 (for drafter's use only)
1 applicant or policyholder is eligible for coverage only if an
2 offer of coverage cannot be obtained by or for the applicant
3 or policyholder from an admitted insurer at approved rates.
4 2.a.(I) All insurers required to be members of such
5 association shall participate in its writings, expenses, and
6 losses. Surplus of the association shall be retained for the
7 payment of claims and shall not be distributed to the member
8 insurers. Such participation by member insurers shall be in
9 the proportion that the net direct premiums of each member
10 insurer written for property insurance in this state during
11 the preceding calendar year bear to the aggregate net direct
12 premiums for property insurance of all member insurers, as
13 reduced by any credits for voluntary writings, in this state
14 during the preceding calendar year. For the purposes of this
15 subsection, the term "net direct premiums" means direct
16 written premiums for property insurance, reduced by premium
17 for liability coverage and for the following if included in
18 allied lines: rain and hail on growing crops; livestock;
19 association direct premiums booked; National Flood Insurance
20 Program direct premiums; and similar deductions specifically
21 authorized by the plan of operation and approved by the
22 department. A member's participation shall begin on the first
23 day of the calendar year following the year in which it is
24 issued a certificate of authority to transact property
25 insurance in the state and shall terminate 1 year after the
26 end of the calendar year during which it no longer holds a
27 certificate of authority to transact property insurance in the
28 state. The commissioner, after review of annual statements,
29 other reports, and any other statistics that the commissioner
30 deems necessary, shall certify to the association the
31 aggregate direct premiums written for property insurance in
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HOUSE AMENDMENT
Bill No. HB 291
Amendment No. 1 (for drafter's use only)
1 this state by all member insurers.
2 3. The plan shall also provide that any member with a
3 surplus as to policyholders of $25 $20 million or less writing
4 25 percent or more of its total countrywide property insurance
5 premiums in this state may petition the department, within the
6 first 90 days of each calendar year, to qualify as a limited
7 apportionment company. The apportionment of such a member
8 company in any calendar year for which it is qualified shall
9 not exceed its gross participation, which shall not be
10 affected by the formula for voluntary writings. In no event
11 shall a limited apportionment company be required to
12 participate in any apportionment of losses pursuant to
13 sub-sub-subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II)
14 in the aggregate which exceeds $50 million after payment of
15 available plan funds in any calendar year. However, a limited
16 apportionment company shall collect from its policyholders any
17 emergency assessment imposed under sub-sub-subparagraph
18 2.d.(III). The plan shall provide that, if the department
19 determines that any regular assessment will result in an
20 impairment of the surplus of a limited apportionment company,
21 the department may direct that all or part of such assessment
22 be deferred. However, there shall be no limitation or
23 deferment of an emergency assessment to be collected from
24 policyholders under sub-sub-subparagraph 2.d.(III).
25 (II) The plan of operation shall provide for a board
26 of directors consisting of the Insurance Consumer Advocate
27 appointed under s. 627.0613, 2 1 consumer representatives
28 representative appointed by the Insurance Commissioner, 1
29 consumer representative appointed by the Governor, 1 consumer
30 representative appointed by the Speaker of the House of
31 Representatives, 1 consumer representative appointed by the
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HOUSE AMENDMENT
Bill No. HB 291
Amendment No. 1 (for drafter's use only)
1 President of the Senate, 1 representative of a financial
2 institution engaging in residential mortgage lending within
3 the association's eligible areas, 1 representative of realtors
4 engaged in the sale of residential property within the
5 association's eligible areas, 1 representative who has
6 expertise in State Minimum Building Codes and coastal
7 construction, 1 association policyholder, and 1 representative
8 who is a licensed property and casualty insurance agent, and 4
9 12 additional members appointed as specified in the plan of
10 operation. One of the 4 12 additional members shall be
11 elected by the domestic companies of this state on the basis
12 of cumulative weighted voting based on the net direct premiums
13 of domestic companies in this state and shall be residents of
14 this state. Nothing in the 1997 amendments to this paragraph
15 terminates the existing board or the terms of any members of
16 the board.
17 (III) The plan of operation shall provide a formula
18 whereby a company voluntarily providing windstorm coverage in
19 affected areas will be relieved wholly or partially from
20 apportionment of a regular assessment pursuant to
21 sub-sub-subparagraph d.(I) or sub-sub-subparagraph d.(II).
22 (IV) A company which is a member of a group of
23 companies under common management may elect to have its
24 credits applied on a group basis, and any company or group may
25 elect to have its credits applied to any other company or
26 group.
27 (V) There shall be no credits or relief from
28 apportionment to a company for emergency assessments collected
29 from its policyholders under sub-sub-subparagraph d.(III).
30 (VI) The plan of operation may also provide for the
31 award of credits, for a period not to exceed 3 years, from a
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HOUSE AMENDMENT
Bill No. HB 291
Amendment No. 1 (for drafter's use only)
1 regular assessment pursuant to sub-sub-subparagraph d.(I) or
2 sub-sub-subparagraph d.(II) as an incentive for taking
3 policies out of the Residential Property and Casualty Joint
4 Underwriting Association. In order to qualify for the
5 exemption under this sub-sub-subparagraph, the take-out plan
6 must provide that at least 40 percent of the policies removed
7 from the Residential Property and Casualty Joint Underwriting
8 Association cover risks located in Dade, Broward, and Palm
9 Beach Counties or at least 30 percent of the policies so
10 removed cover risks located in Dade, Broward, and Palm Beach
11 Counties and an additional 50 percent of the policies so
12 removed cover risks located in other coastal counties, and
13 must also provide that no more than 15 percent of the policies
14 so removed may exclude windstorm coverage. With the approval
15 of the department, the association may waive these geographic
16 criteria for a take-out plan that removes at least the lesser
17 of 100,000 Residential Property and Casualty Joint
18 Underwriting Association policies or 15 percent of the total
19 number of Residential Property and Casualty Joint Underwriting
20 Association policies, provided the governing board of the
21 Residential Property and Casualty Joint Underwriting
22 Association certifies that the take-out plan will materially
23 reduce the Residential Property and Casualty Joint
24 Underwriting Association's 100-year probable maximum loss from
25 hurricanes. With the approval of the department, the board
26 may extend such credits for an additional year if the insurer
27 guarantees an additional year of renewability for all policies
28 removed from the Residential Property and Casualty Joint
29 Underwriting Association, or for 2 additional years if the
30 insurer guarantees 2 additional years of renewability for all
31 policies removed from the Residential Property and Casualty
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HOUSE AMENDMENT
Bill No. HB 291
Amendment No. 1 (for drafter's use only)
1 Joint Underwriting Association.
2 b. Assessments to pay deficits in the association
3 under this subparagraph shall be included as an appropriate
4 factor in the making of rates as provided in s. 627.3512.
5 c. The Legislature finds that the potential for
6 unlimited deficit assessments under this subparagraph may
7 induce insurers to attempt to reduce their writings in the
8 voluntary market, and that such actions would worsen the
9 availability problems that the association was created to
10 remedy. It is the intent of the Legislature that insurers
11 remain fully responsible for paying regular assessments and
12 collecting emergency assessments for any deficits of the
13 association; however, it is also the intent of the Legislature
14 to provide a means by which assessment liabilities may be
15 amortized over a period of years.
16 d.(I) When the deficit incurred in a particular
17 calendar year is 10 percent or less of the aggregate statewide
18 direct written premium for property insurance for the prior
19 calendar year for all member insurers, the association shall
20 levy an assessment on member insurers in an amount equal to
21 the deficit.
22 (II) When the deficit incurred in a particular
23 calendar year exceeds 10 percent of the aggregate statewide
24 direct written premium for property insurance for the prior
25 calendar year for all member insurers, the association shall
26 levy an assessment on member insurers in an amount equal to
27 the greater of 10 percent of the deficit or 10 percent of the
28 aggregate statewide direct written premium for property
29 insurance for the prior calendar year for member insurers. Any
30 remaining deficit shall be recovered through emergency
31 assessments under sub-sub-subparagraph (III).
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HOUSE AMENDMENT
Bill No. HB 291
Amendment No. 1 (for drafter's use only)
1 (III) Upon a determination by the board of directors
2 that a deficit exceeds the amount that will be recovered
3 through regular assessments on member insurers, pursuant to
4 sub-sub-subparagraph (I) or sub-sub-subparagraph (II), the
5 board shall levy, after verification by the department,
6 emergency assessments to be collected by member insurers and
7 by underwriting associations created pursuant to this section
8 which write property insurance, upon issuance or renewal of
9 property insurance policies other than National Flood
10 Insurance policies in the year or years following levy of the
11 regular assessments. The amount of the emergency assessment
12 collected in a particular year shall be a uniform percentage
13 of that year's direct written premium for property insurance
14 for all member insurers and underwriting associations,
15 excluding National Flood Insurance policy premiums, as
16 annually determined by the board and verified by the
17 department. The department shall verify the arithmetic
18 calculations involved in the board's determination within 30
19 days after receipt of the information on which the
20 determination was based. Notwithstanding any other provision
21 of law, each member insurer and each underwriting association
22 created pursuant to this section shall collect emergency
23 assessments from its policyholders without such obligation
24 being affected by any credit, limitation, exemption, or
25 deferment. The emergency assessments so collected shall be
26 transferred directly to the association on a periodic basis as
27 determined by the association. The aggregate amount of
28 emergency assessments levied under this sub-sub-subparagraph
29 in any calendar year may not exceed the greater of 10 percent
30 of the amount needed to cover the original deficit, plus
31 interest, fees, commissions, required reserves, and other
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HOUSE AMENDMENT
Bill No. HB 291
Amendment No. 1 (for drafter's use only)
1 costs associated with financing of the original deficit, or 10
2 percent of the aggregate statewide direct written premium for
3 property insurance written by member insurers and underwriting
4 associations for the prior year, plus interest, fees,
5 commissions, required reserves, and other costs associated
6 with financing the original deficit. The board may pledge the
7 proceeds of the emergency assessments under this
8 sub-sub-subparagraph as the source of revenue for bonds, to
9 retire any other debt incurred as a result of the deficit or
10 events giving rise to the deficit, or in any other way that
11 the board determines will efficiently recover the deficit. The
12 emergency assessments under this sub-sub-subparagraph shall
13 continue as long as any bonds issued or other indebtedness
14 incurred with respect to a deficit for which the assessment
15 was imposed remain outstanding, unless adequate provision has
16 been made for the payment of such bonds or other indebtedness
17 pursuant to the document governing such bonds or other
18 indebtedness. Emergency assessments collected under this
19 sub-sub-subparagraph are not part of an insurer's rates, are
20 not premium, and are not subject to premium tax, fees, or
21 commissions; however, failure to pay the emergency assessment
22 shall be treated as failure to pay premium.
23 (IV) Each member insurer's share of the total regular
24 assessments under sub-sub-subparagraph (I) or
25 sub-sub-subparagraph (II) shall be in the proportion that the
26 insurer's net direct premium for property insurance in this
27 state, for the year preceding the assessment bears to the
28 aggregate statewide net direct premium for property insurance
29 of all member insurers, as reduced by any credits for
30 voluntary writings for that year.
31 (V) If regular deficit assessments are made under
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HOUSE AMENDMENT
Bill No. HB 291
Amendment No. 1 (for drafter's use only)
1 sub-sub-subparagraph (I) or sub-sub-subparagraph (II), or by
2 the Residential Property and Casualty Joint Underwriting
3 Association under sub-subparagraph (6)(b)3.a. or
4 sub-subparagraph (6)(b)3.b., the association shall levy upon
5 the association's policyholders, as part of its next rate
6 filing, or by a separate rate filing solely for this purpose,
7 a market equalization surcharge in a percentage equal to the
8 total amount of such regular assessments divided by the
9 aggregate statewide direct written premium for property
10 insurance for member insurers for the prior calendar year.
11 Market equalization surcharges under this sub-sub-subparagraph
12 are not considered premium and are not subject to commissions,
13 fees, or premium taxes; however, failure to pay a market
14 equalization surcharge shall be treated as failure to pay
15 premium.
16 e. The governing body of any unit of local government,
17 any residents of which are insured under the plan, may issue
18 bonds as defined in s. 125.013 or s. 166.101 to fund an
19 assistance program, in conjunction with the association, for
20 the purpose of defraying deficits of the association. In order
21 to avoid needless and indiscriminate proliferation,
22 duplication, and fragmentation of such assistance programs,
23 any unit of local government, any residents of which are
24 insured by the association, may provide for the payment of
25 losses, regardless of whether or not the losses occurred
26 within or outside of the territorial jurisdiction of the local
27 government. Revenue bonds may not be issued until validated
28 pursuant to chapter 75, unless a state of emergency is
29 declared by executive order or proclamation of the Governor
30 pursuant to s. 252.36 making such findings as are necessary to
31 determine that it is in the best interests of, and necessary
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HOUSE AMENDMENT
Bill No. HB 291
Amendment No. 1 (for drafter's use only)
1 for, the protection of the public health, safety, and general
2 welfare of residents of this state and the protection and
3 preservation of the economic stability of insurers operating
4 in this state, and declaring it an essential public purpose to
5 permit certain municipalities or counties to issue bonds as
6 will provide relief to claimants and policyholders of the
7 association and insurers responsible for apportionment of plan
8 losses. Any such unit of local government may enter into such
9 contracts with the association and with any other entity
10 created pursuant to this subsection as are necessary to carry
11 out this paragraph. Any bonds issued under this
12 sub-subparagraph shall be payable from and secured by moneys
13 received by the association from assessments under this
14 subparagraph, and assigned and pledged to or on behalf of the
15 unit of local government for the benefit of the holders of
16 such bonds. The funds, credit, property, and taxing power of
17 the state or of the unit of local government shall not be
18 pledged for the payment of such bonds. If any of the bonds
19 remain unsold 60 days after issuance, the department shall
20 require all insurers subject to assessment to purchase the
21 bonds, which shall be treated as admitted assets; each insurer
22 shall be required to purchase that percentage of the unsold
23 portion of the bond issue that equals the insurer's relative
24 share of assessment liability under this subsection. An
25 insurer shall not be required to purchase the bonds to the
26 extent that the department determines that the purchase would
27 endanger or impair the solvency of the insurer. The authority
28 granted by this sub-subparagraph is additional to any bonding
29 authority granted by subparagraph 6.
30 3. The plan shall also provide that any member with a
31 surplus as to policyholders of $25 $20 million or less writing
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HOUSE AMENDMENT
Bill No. HB 291
Amendment No. 1 (for drafter's use only)
1 25 percent or more of its total countrywide property insurance
2 premiums in this state may petition the department, within the
3 first 90 days of each calendar year, to qualify as a limited
4 apportionment company. The apportionment of such a member
5 company in any calendar year for which it is qualified shall
6 not exceed its gross participation, which shall not be
7 affected by the formula for voluntary writings. In no event
8 shall a limited apportionment company be required to
9 participate in any apportionment of losses pursuant to
10 sub-sub-subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II)
11 in the aggregate which exceeds $50 million after payment of
12 available plan funds in any calendar year. However, a limited
13 apportionment company shall collect from its policyholders any
14 emergency assessment imposed under sub-sub-subparagraph
15 2.d.(III). The plan shall provide that, if the department
16 determines that any regular assessment will result in an
17 impairment of the surplus of a limited apportionment company,
18 the department may direct that all or part of such assessment
19 be deferred. However, there shall be no limitation or
20 deferment of an emergency assessment to be collected from
21 policyholders under sub-sub-subparagraph 2.d.(III).
22 4. The plan shall provide for the deferment, in whole
23 or in part, of a regular assessment of a member insurer under
24 sub-sub-subparagraph 2.d.(I) or sub-sub-subparagraph 2.d.(II),
25 but not for an emergency assessment collected from
26 policyholders under sub-sub-subparagraph 2.d.(III), if, in the
27 opinion of the commissioner, payment of such regular
28 assessment would endanger or impair the solvency of the member
29 insurer. In the event a regular assessment against a member
30 insurer is deferred in whole or in part, the amount by which
31 such assessment is deferred may be assessed against the other
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HOUSE AMENDMENT
Bill No. HB 291
Amendment No. 1 (for drafter's use only)
1 member insurers in a manner consistent with the basis for
2 assessments set forth in sub-sub-subparagraph 2.d.(I) or
3 sub-sub-subparagraph 2.d.(II).
4 5.a. The plan of operation may include deductibles and
5 rules for classification of risks and rate modifications
6 consistent with the objective of providing and maintaining
7 funds sufficient to pay catastrophe losses.
8 b. The association may require arbitration of a rate
9 filing under s. 627.062(6). It is the intent of the
10 Legislature that the rates for coverage provided by the
11 association be actuarially sound and not competitive with
12 approved rates charged in the admitted voluntary market such
13 that the association functions as a residual market mechanism
14 to provide insurance only when the insurance cannot be
15 procured in the voluntary market. The plan of operation shall
16 provide a mechanism to assure that, beginning no later than
17 January 1, 1999, the rates charged by the association for each
18 line of business are reflective of approved rates in the
19 voluntary market for hurricane coverage for each line of
20 business in the various areas eligible for association
21 coverage.
22 c. The association shall provide for windstorm
23 coverage on residential properties in limits up to $10 million
24 for commercial lines residential risks and up to $1 million
25 for personal lines residential risks. If coverage with the
26 association is sought for a residential risk valued in excess
27 of these limits, coverage shall be available to the risk up to
28 the replacement cost or actual cash value of the property, at
29 the option of the insured, if coverage for the risk cannot be
30 located in the authorized market. The association must accept
31 a commercial lines residential risk with limits above $10
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HOUSE AMENDMENT
Bill No. HB 291
Amendment No. 1 (for drafter's use only)
1 million or a personal lines residential risk with limits above
2 $1 million if coverage is not available in the authorized
3 market. The association may write coverage above the limits
4 specified in this subparagraph with or without facultative or
5 other reinsurance coverage, as the association determines
6 appropriate.
7 d. The plan of operation must provide objective
8 criteria and procedures, approved by the department, to be
9 uniformly applied for all applicants in determining whether an
10 individual risk is so hazardous as to be uninsurable. In
11 making this determination and in establishing the criteria and
12 procedures, the following shall be considered:
13 (I) Whether the likelihood of a loss for the
14 individual risk is substantially higher than for other risks
15 of the same class; and
16 (II) Whether the uncertainty associated with the
17 individual risk is such that an appropriate premium cannot be
18 determined.
19
20 The acceptance or rejection of a risk by the association
21 pursuant to such criteria and procedures must be construed as
22 the private placement of insurance, and the provisions of
23 chapter 120 do not apply.
24 e. When the association enters into a contractual
25 agreement for a take-out plan, the producing agent of record
26 of the association policy is entitled to retain any unearned
27 commission on such policy, and the take-out insurer shall:
28 (I) Pay to the producing agent of record of the
29 association policy an amount equal to the insurer's usual and
30 customary commission for the type of policy written if the
31 term of the association policy was in excess of 6 months, or
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HOUSE AMENDMENT
Bill No. HB 291
Amendment No. 1 (for drafter's use only)
1 one-half of such usual and customary commission if the term of
2 the association policy was 6 months or less; or
3 (II) Offer to allow the producing agent of record of
4 the association policy to continue servicing the policy for a
5 period of not less than 1 year and offer to pay the agent the
6 insurer's usual and customary commission for the type of
7 policy written.
8
9 The take-out insurer need not take any further action if the
10 offer is rejected. This sub-subparagraph does not apply to any
11 reciprocal interinsurance exchange, nonprofit federation, or
12 any subsidiary or affiliate of such organization. This
13 sub-subparagraph does not apply if the agent is also the agent
14 of record on the new coverage. The requirement of this
15 sub-subparagraph that the producing agent of record is
16 entitled to retain the unearned commission on an association
17 policy does not apply to a policy for which coverage has been
18 provided in the association for 30 days or less.
19 f. The policies issued by the association must provide
20 that if the association obtains an offer from an authorized
21 insurer to cover the risk at its approved rates under either a
22 standard policy including wind coverage or, if consistent with
23 the insurer's underwriting rules as filed with the department,
24 a basic policy including wind coverage, the risk is no longer
25 eligible for coverage through the association. Upon
26 termination of eligibility, the association shall provide
27 written notice to the policyholder and agent of record stating
28 that the association policy must be canceled as of 60 days
29 after the date of the notice because of the offer of coverage
30 from an authorized insurer. Other provisions of the insurance
31 code relating to cancellation and notice of cancellation do
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HOUSE AMENDMENT
Bill No. HB 291
Amendment No. 1 (for drafter's use only)
1 not apply to actions under this sub-subparagraph.
2 g.f. Association policies and applications must
3 include a notice that the association policy could, under this
4 section, be replaced with a policy issued by an authorized
5 insurer that does not provide coverage identical to the
6 coverage provided by the association. The notice shall also
7 specify that acceptance of association coverage creates a
8 conclusive presumption that the applicant or policyholder is
9 aware of this potential.
10 6.a. The plan of operation may authorize the formation
11 of a private nonprofit corporation, a private nonprofit
12 unincorporated association, a partnership, a trust, a limited
13 liability company, or a nonprofit mutual company which may be
14 empowered, among other things, to borrow money by issuing
15 bonds or by incurring other indebtedness and to accumulate
16 reserves or funds to be used for the payment of insured
17 catastrophe losses. The plan may authorize all actions
18 necessary to facilitate the issuance of bonds, including the
19 pledging of assessments or other revenues.
20 b. Any entity created under this subsection, or any
21 entity formed for the purposes of this subsection, may sue and
22 be sued, may borrow money; issue bonds, notes, or debt
23 instruments; pledge or sell assessments, market equalization
24 surcharges and other surcharges, rights, premiums, contractual
25 rights, projected recoveries from the Florida Hurricane
26 Catastrophe Fund, other reinsurance recoverables, and other
27 assets as security for such bonds, notes, or debt instruments;
28 enter into any contracts or agreements necessary or proper to
29 accomplish such borrowings; and take other actions necessary
30 to carry out the purposes of this subsection. The association
31 may issue bonds or incur other indebtedness, or have bonds
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HOUSE AMENDMENT
Bill No. HB 291
Amendment No. 1 (for drafter's use only)
1 issued on its behalf by a unit of local government pursuant to
2 subparagraph (g)2., in the absence of a hurricane or other
3 weather-related event, upon a determination by the association
4 subject to approval by the department that such action would
5 enable it to efficiently meet the financial obligations of the
6 association and that such financings are reasonably necessary
7 to effectuate the requirements of this subsection. Any such
8 entity may accumulate reserves and retain surpluses as of the
9 end of any association year to provide for the payment of
10 losses incurred by the association during that year or any
11 future year. The association shall incorporate and continue
12 the plan of operation and articles of agreement in effect on
13 the effective date of chapter 76-96, Laws of Florida, to the
14 extent that it is not inconsistent with chapter 76-96, and as
15 subsequently modified consistent with chapter 76-96. The board
16 of directors and officers currently serving shall continue to
17 serve until their successors are duly qualified as provided
18 under the plan. The assets and obligations of the plan in
19 effect immediately prior to the effective date of chapter
20 76-96 shall be construed to be the assets and obligations of
21 the successor plan created herein.
22 c. In recognition of s. 10, Art. I of the State
23 Constitution, prohibiting the impairment of obligations of
24 contracts, it is the intent of the Legislature that no action
25 be taken whose purpose is to impair any bond indenture or
26 financing agreement or any revenue source committed by
27 contract to such bond or other indebtedness issued or incurred
28 by the association or any other entity created under this
29 subsection.
30 7. On such coverage, an agent's remuneration shall be
31 that amount of money payable to the agent by the terms of his
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HOUSE AMENDMENT
Bill No. HB 291
Amendment No. 1 (for drafter's use only)
1 or her contract with the company with which the business is
2 placed. However, no commission will be paid on that portion of
3 the premium which is in excess of the standard premium of that
4 company.
5 8. Subject to approval by the department, the
6 association may establish different eligibility requirements
7 and operational procedures for any line or type of coverage
8 for any specified eligible area or portion of an eligible area
9 if the board determines that such changes to the eligibility
10 requirements and operational procedures are justified due to
11 the voluntary market being sufficiently stable and competitive
12 in such area or for such line or type of coverage and that
13 consumers who, in good faith, are unable to obtain insurance
14 through the voluntary market through ordinary methods would
15 continue to have access to coverage from the association. When
16 coverage is sought in connection with a real property
17 transfer, such requirements and procedures shall not provide
18 for an effective date of coverage later than the date of the
19 closing of the transfer as established by the transferor, the
20 transferee, and, if applicable, the lender.
21 9. Notwithstanding any other provision of law:
22 a. The pledge or sale of, the lien upon, and the
23 security interest in any rights, revenues, or other assets of
24 the association created or purported to be created pursuant to
25 any financing documents to secure any bonds or other
26 indebtedness of the association shall be and remain valid and
27 enforceable, notwithstanding the commencement of and during
28 the continuation of, and after, any rehabilitation,
29 insolvency, liquidation, bankruptcy, receivership,
30 conservatorship, reorganization, or similar proceeding against
31 the association under the laws of this state or any other
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HOUSE AMENDMENT
Bill No. HB 291
Amendment No. 1 (for drafter's use only)
1 applicable laws.
2 b. No such proceeding shall relieve the association of
3 its obligation, or otherwise affect its ability to perform its
4 obligation, to continue to collect, or levy and collect,
5 assessments, market equalization or other surcharges,
6 projected recoveries from the Florida Hurricane Catastrophe
7 Fund, reinsurance recoverables, or any other rights, revenues,
8 or other assets of the association pledged.
9 c. Each such pledge or sale of, lien upon, and
10 security interest in, including the priority of such pledge,
11 lien, or security interest, any such assessments, emergency
12 assessments, market equalization or renewal surcharges,
13 projected recoveries from the Florida Hurricane Catastrophe
14 Fund, reinsurance recoverables, or other rights, revenues, or
15 other assets which are collected, or levied and collected,
16 after the commencement of and during the pendency of or after
17 any such proceeding shall continue unaffected by such
18 proceeding.
19 d. As used in this subsection, the term "financing
20 documents" means any agreement, instrument, or other document
21 now existing or hereafter created evidencing any bonds or
22 other indebtedness of the association or pursuant to which any
23 such bonds or other indebtedness has been or may be issued and
24 pursuant to which any rights, revenues, or other assets of the
25 association are pledged or sold to secure the repayment of
26 such bonds or indebtedness, together with the payment of
27 interest on such bonds or such indebtedness, or the payment of
28 any other obligation of the association related to such bonds
29 or indebtedness.
30 e. Any such pledge or sale of assessments, revenues,
31 contract rights or other rights or assets of the association
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HOUSE AMENDMENT
Bill No. HB 291
Amendment No. 1 (for drafter's use only)
1 shall constitute a lien and security interest, or sale, as the
2 case may be, that is immediately effective and attaches to
3 such assessments, revenues, contract, or other rights or
4 assets, whether or not imposed or collected at the time the
5 pledge or sale is made. Any such pledge or sale is effective,
6 valid, binding, and enforceable against the association or
7 other entity making such pledge or sale, and valid and binding
8 against and superior to any competing claims or obligations
9 owed to any other person or entity, including policyholders in
10 this state, asserting rights in any such assessments,
11 revenues, contract, or other rights or assets to the extent
12 set forth in and in accordance with the terms of the pledge or
13 sale contained in the applicable financing documents, whether
14 or not any such person or entity has notice of such pledge or
15 sale and without the need for any physical delivery,
16 recordation, filing, or other action.
17 f. There shall be no liability on the part of, and no
18 cause of action of any nature shall arise against, any member
19 insurer or its agents or employees, agents or employees of the
20 association, members of the board of directors of the
21 association, or the department or its representatives, for any
22 action taken by them in the performance of their duties or
23 responsibilities under this subsection. Such immunity does not
24 apply to actions for breach of any contract or agreement
25 pertaining to insurance, or any willful tort.
26 Section 4. Effective June 1, 2001, paragraph (c) is
27 added to subsection (1) of section 627.7013, Florida Statutes,
28 and paragraph (e) of subsection (2) of that section is amended
29 to read:
30 627.7013 Orderly markets for personal lines
31 residential property insurance.--
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HOUSE AMENDMENT
Bill No. HB 291
Amendment No. 1 (for drafter's use only)
1 (1) FINDINGS AND PURPOSE.--
2 (c) The Legislature finds, as of January 1, 2001,
3 that:
4 1. The conditions described in paragraphs (a) and (b)
5 remain applicable to the property insurance market in this
6 state in 2001 and are likely to remain applicable for several
7 years thereafter.
8 2. The general instability of the market is reflected
9 by the following facts:
10 a. The Florida Windstorm Underwriting Association has
11 more than 400,000 policies in force and the Florida
12 Residential Property and Casualty Joint Underwriting
13 Association has more than 60,000 policies in force.
14 b. A further extension of the operation of this
15 section until June 1, 2004, will provide an opportunity for
16 the market to stabilize and for continuation of residual
17 market depopulation efforts.
18 (2) MORATORIUM COMPLETION.--
19 (e) This subsection is repealed on June 1, 2004 2001.
20 Section 5. Effective June 1, 2001, present paragraph
21 (c) of subsection (1) of section 627.7014, Florida Statutes,
22 is redesignated as paragraph (d), a new paragraph (c) is added
23 to that subsection, and paragraph (d) of subsection (2) of
24 that section is amended to read:
25 627.7014 Orderly markets for condominium association
26 residential property insurance.--
27 (1) FINDINGS AND PURPOSE.--
28 (c) The Legislature finds, as of January 1, 2001,
29 that:
30 1. The conditions described in paragraph (a) remain
31 applicable to the commercial residential property insurance
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HOUSE AMENDMENT
Bill No. HB 291
Amendment No. 1 (for drafter's use only)
1 market in this state in 2001 and are likely to remain
2 applicable for several years thereafter.
3 2. The general instability of the market is reflected
4 by the fact that the Florida Windstorm Underwriting
5 Association has approximately 9,000 commercial residential
6 policies in force as of December 31, 2000.
7 3. An extension of the operation of this section until
8 June 1, 2004, will provide an opportunity for the market to
9 stabilize and for continuation of residual market depopulation
10 efforts.
11 (2) MORATORIUM.--
12 (d) This subsection is repealed on June 1, 2004 2001.
13 Section 6. This act shall take effect upon becoming a
14 law.
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18 And the title is amended as follows:
19 On page 1,
20 remove from the title of the bill: The entire title
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22 and insert in lieu thereof:
23 A bill to be entitled
24 An act relating to property insurance; amending
25 s. 624.4072, F.S.; increasing a period of
26 exemption from certain taxes and assessments
27 for certain minority businesses; extending a
28 future repeal; amending s. 627.0629, F.S.;
29 specifying criteria for certain rate filings;
30 providing requirements; amending s. 627.351,
31 F.S.; revising surplus requirements for limited
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HOUSE AMENDMENT
Bill No. HB 291
Amendment No. 1 (for drafter's use only)
1 apportionment companies; revising the
2 membership of the board of directors of the
3 Florida Windstorm Underwriting Association;
4 providing for payment of agent commission;
5 amending s. 627.7013, F.S.; extending a
6 moratorium applicable to certain markets;
7 amending s. 627.7014, extending the moratorium
8 applicable to certain markets; providing an
9 effective date.
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